Functions And Powers Of Corporate Affairs Commission (CAC) And A Review Of The Case Of (CAC) V. United Bank For Africa (UBA) Plc And Ors (2017)2 NWLR (Pt 1548)99 At 129-130 By Uwandu Ikedi Igbonekwu

Functions of Corporate Affairs Commission (hereinafter referred to as CAC) is provided under section 7 of Companies and Allied Matters Act (hereinafter referred to as CAMA) as follows (1) the functions of the commission shall be to-

(a) subject to section 541 of this Act, administer this Act including the regulation and supervision of the formation, incorporation, registration, management, and winding up of companies under or pursuant to this Act;
(b) establish and maintain a companies registry and offices in all the States of the Federation suitably and adequately equipped to discharge its functions under this Act or any other law in respect of which it is charged with responsibility;
(c) arrange or conduct an investigation into the affairs of any company where the interests of the shareholders and the public so demand;
(d) perform such other functions as may be specified by any Act or enactment; and
(e) undertake such other activities as are necessary or expedient for giving full effect to the provisions of this Act.

Paragraph (e) is the omnibus provision which gives it power to undertake other activities for the administration of CAMA, the power given to it by paragraph (e) to undertake other activities is not power at large, it must be in line with CAMA and exercised for the purpose of administering the Act. The functions of CAC was reaffirmed in the case of Sifax (Nig) Ltd v. Migfo (Nig) Ltd (2018)9 NWLR (pt 1623)p. 138.

CAC as the Corporate Ombudsman has enormous functions such as:

(a) Registration of charges created by companies as provided in section 197 of CAMA.
(b) Determining qualifications of small companies for the purpose of delivering modified financial statement as provided in section 350 of CAMA.
(c) Registration of resolutions, documents and orders delivered to it as provided in sections 237 and 102(2) of CAMA.
(d) Keeping register of company charges requiring registration as provided in section 198 of CAMA.
(e) Giving directions, approvals and extension of time to companies as provided in sections 213(1)(b), 450(2) and 467(1) of CAMA.
(f) Receiving a liquidator’s account and causing it to be audited as provided under section 429 of CAMA.
(g) Calling or directing the calling of an annual general meeting when default is made as provided in section 213(2) of CAMA.
(h) Applying to the court for an order directing a defaulting receiver or manager of a company to render proper account of his receipts, file returns or other documents as provided under section 399 of CAMA, among other powers that may be given to it (CAC) by any other Act or enactment as stated in paragraph (d) of section 7 of CAMA.

By section 310(1) CAMA provides that:
“An application to the court by petition for an order under section 311 of this Act in relation to a company may be made by any of the following persons
(a) a member of the company;
(b) a director or officer or former director or officer of the company;
(c) a creditor;
(d) the Commission; or
(e) any other person who, in the discretion of the court, is the proper person to make an application under section 311 of this Act”.

Then section 311(1) provides that:
“An application for relief on the ground that the affairs of a company are being conducted in an illegal or oppressive manner may be made to the court by petition”. What this means is that the power of CAC also extends to securing relief for the minority and in protecting public interests. By virtue of section 303 of CAMA CAC can also bring derivative action on behalf of a company or to intervene in an action to which the company is a party for the purpose of prosecuting, defending or discontinuing the action on behalf of the company.
Having seen the wide range of powers given to CAC for the purpose of corporate affairs, it also has power to appoint inspectors to investigate the affairs of a company, this is what led to decision in CAC v. UBA Plc & ors (supra) before reviewing this case it is important to draw your attention to the provisions of section 312(1)(g) which provide that: “(1)If the court is satisfied that a petition under sections 310 and 311 of this Act is well founded, it may make such order or orders as it thinks fit for giving relief in respect of the matter complained of. (g) directing an investigation to be made by the Commission”.

With all due respect to his Lordships, I think proper interpretation was not given to section 315 because subsection (2) draws its power from subsection (1), subsection (2) cannot be interpreted in isolation. The appointment of inspectors should be distinguished from investigation, I agree that the commission can appoint inspectors without court order, but before such investigation will be carried out the CAC must obtain court order and the investigation must be with respect to the things listed in section 315(2)(a). I think the judgment was given for the purpose of giving effect to the functions of CAC and also with regards to public policy. The Court of Appeal (with all due respect) erred in my view because the provision of section 312(2)(g) is in line with section 315 which requires court order in order to carry out the investigation, once this order is gotten the Commission (Inspectors) can now carry out some judicial functions such as administering oath, calling for evidence, interviewing directors and officers of the company etc. as provided under sections 316, 317 and 318, by virtue of section 319 obstruction of inspectors by officers or agents of the company is treated as contempt of court, this is because the inspectors are acting (Investigating) with the permission (order) of the court. While giving effect to the powers of CAC the court should do it in accordance with provisions of CAMA.

BRIEF FACT OF THE CASE
In the case of CAC v. UBA & ors (supra), the appellant, a regulatory body established under CAMA, in exercise of the powers conferred on it by section 7 of the Act, wrote to various commercial banks requesting them to furnish to it records of all loan transactions and documentation between the bank and public and private companies in Nigeria between 1st January 2008 and 31st December 2010. The respondents failed to comply with the demand on the grounds that compliance would be a breach of their confidentiality duty to their customers and that the appellant failed to obtain an order of court in that regard.

By reason of the respondents failure, the appellant instituted an action at the Federal High Court, Lagos. The trial court granted the appellant two of the reliefs and declined one. Not satisfied, the appellant appealed to the Court of Appeal. At the Court of Appeal, the 5th respondent contended that by virtue of appellant’s admission at the trial Court that the 5th respondent was merely an agent of the company which created a charge in the 5th respondent’s favour, the appellant could not request for information from the 5th respondent about its disclosed principal. While determining the appeal, the Court of Appeal considered the provisions of sections 199(1), 314, 315 and 317 of CAMA, consequently, the appeal was uniamously allowed.

I will say that this judgement was given due to lack of proper understanding of sections 314 and 315, to this effect the Court held that: “…while section 314(1) and (2) gives the commission discretion as to the appointment of inspectors, section 314(3) makes it mandatory that the application which may be considered by the commission pursuant to section 314(2) shall be supported by any evidence that may be required by any evidence that may be required by the commission for the appointment of such inspectors.

Evidently, the provision relates exclusively to powers conferred upon the commission as to the appointment of inspectors. Therefore, no order of court is needed before inspectors will be appointed pursuant to section 314 of the Act”. I agree with the above ruling that by virtue of section 314 no order of court is needed to appoint inspectors, but by virtue of section 315 before the inspectors appointed could act, there must be court order permitting them to conduct such investigation, this court order is a delegation of the power of the court to the inspectors therefore, they are given power to administer oath, call for evidence etc. Without this court order I don’t think the appointed inspectors can act.

Per Obaseki-Adejumo JCA at page 133-134, paragraph F-B said: “I am inclined to agree with the appellant that there would not have been any need for the draftsman to include section 314(1) and 315(2) in the Act if the legislature intended strictly that the appellant shall only undertake an investigation of a company incorporated under the Act pursuant to an order of court. While the use of the word ‘SHALL’ in section 315(1) presupposes the mandatory requirement of a court order by the commission before it can appoint inspectors, the use of the word ‘MAY’ in section 314 (1) and 315(1) presupposes the permissive discretion granted in favour of the appellant subject to certain conditions prescribed thereunder.

To this extent, I must say that the argument put forward by the respective respondents’ counsel in their briefs to the effect that the respondents are bound to observe strict confidentiality between it and its customers and that the trial Court declined to grant any order in this regard because the appellant failed to meet the threshold required for the grant of the order is misconceived. Evidently, as stated above, the circumstances under section 315(2) are those the Act prescribes that the commission consider in the exercise of the discretion conferred upon it thereon”. To say that section 315(2) will not be interpreted in line with section 315(1) is to say that section 315(1) is a stand-alone section and should not be given a community reading. It distorts the hearts of the drafters of CAMA. A community reading of that section will give it the required effect and assist it to achieve Its purpose. That particular section is very clear, I don’t see any ambiguity in it, it is disheartening to see his Lordships give it different interpretations, for this same reason section 312(1)(g) says that CAC must obtain court order before investigating the affairs of a company. Law is meant to be certain, it should not approbate and reprobate on the same issues.

The court further held that “the essence of the specific and distinct provision of section 315(2) of CAMA is to allow the Corporate Affairs Commission as the regulatory body set up pursuant to section 7 of the Act through inspectors appointed engage in “in-house cleaning” of the company’s record and also decide the line of action to take, most especially in cases where there is deliberate and misleading information found as a result of the investigation.

To construe the provision otherwise will result in rendering the commission as a toothless bulldog contrary to the intendment of the draftsman”. From the above ruling it is clear that the judgement was given based on public policy by giving effect to the powers of CAC. Looking at section 317 of CAMA which states that when an inspector is appointed under section 314 or 315 of the Act, it shall be the duty of all officers and agents of the company, and of all officers and agents of any other body corporate whose affairs are investigated under section 316 of the Act:

(a) To produce to the inspector all books and documents of or relating to the company or as the case may be, the other body corporate which are in their custody or power;
(b) To attend before the inspector when required to do so; and
(c) Otherwise to give the inspector all assistance in connection with the investigation which he is reasonably able to give.

Court order is a condition precedent before the inspector could act, the power of the court are in that situation delegated to the inspector because the Act gives the inspector duly appointed power to administer oath on persons mentioned in section 317(2). Ordinarily, the inspector can not administer oath unless he is acting with court order.

I suggest that section 315 be given a community reading so that the intendment of the draftsman will not be defeated. With reference to other provisions of CAMA it is clear that court order is required before investigation but not before appointment.

The powers of CAC are clearly stated in CAMA, they should not go beyond their power. The court should observe all lay down rules and condition precedent required of CAC. Irrespective of the fact that CAC is trying to protect investors, minorities and the public they have to follow the due process.

Uwandu Ikedi I., 08133212382, Email: Uwanduikedi@gmail.com